Lion abandons controversial Montana offer

By DITA DE BONI liquor writer

Lion Nathan will not proceed with its controversial two-tiered offer for control of Montana Group.

The brewer issued its decision several hours after the Stock Exchange standing committee posted its findings on why it blocked the offer on July 16.

Lion is understood to be working on another offer which would comply with both the Takeovers Code and the committee's original defaulter securities deci-sion. However, spokesman Warwick Bryan was coy about the brewer's plans. "I'm not able to confirm when a new offer might be made, or the nature of any offer we might make," he told Bloomberg. "We're looking at all our options at the moment."

In its decision posted on the Stock Exchange website yesterday, the committee accepted evidence that the selldown of 19 per cent of Montana and a subsequent buyback of shares were linked.

"The committee accepts the arguments of Allied [Domecq].

"The sale of the defaulted shares and the offer to buy is such that, in reality, the purchasers do have the right to sell back the shares... The absence of any binding legal commitment of Lion Nathan to purchase the shares does not detract from this conclusion. As the committee has found, the selldown and the purchase amounted to 'an arrangement or understanding' which would come into effect when the two transactions were completed."

On July 2, Lion made a two-tiered offer to Montana shareholders for the remainder of the company: an initial offer of $5.50 for 11 per cent of Montana, which would have returned Lion to a 51 per cent holding, followed by a second offer for remaining shares at $3.70 each.

On July 16, the committee ruled that this offer did not comply with Stock Exchange listing rules, or with its previous decision forcing the brewer to divest a 19 per cent stake in Montana - about a third of its holding.

In selling down its stake, Lion was required to refrain from arranging, however informally, to buy it back.